Looking at the bond market, Kass thinks the long end of the curve is about to make a major move.

“I think there’s 100 basis points to the upside in the yields in the 10-year and 30-year,” he says.

Ahead of the broadcast, Kass cited the following catalysts to support his thesis.

- Flight to safety is going to diminish- Flows out of stock funds & into bonds seem to be at a tipping point- Confidence is recovering- Inflation remains an issue- Fiscal imbalances to come back and bite the bond market

Source: Doug Kass, Seabreeze Partners

And Kass thinks technicals are starting to confirm his thesis. “The 10-year note is now yielding 2.1%, it’s just broke out of a 6 month range," he says.

Tethered to this trade is Kass’ concern about the nation’s fiscal imbalance. The US said the deficit would swell to $1.2 trillion this year, $93 billion more than projected largely due to the payroll tax cut. “The failure to address fiscal imbalance is likely to come back and bit the bond market.”

Markets

Of course a decline in banks could drag down the entire market. And that begs the question – can bonds go down while stocks also go down. Kass thinks it can. “There’s ample precedent that both can go down,” he says.

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Trader disclosure: On March13, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Finerman is short AAPL calls; Finerman is long JPM; Finerman is long WMT; Finerman is long TGT; Finerman is long HPQ; Finerman’s firm is long BAC; Finerman’s firm is long JPM; Finerman’s firm is long HPQ; Kelly is long GLD puts; Kelly is long SMH; Kelly is long SPY calls; Kelly is long IWM; Kelly is long KRE; Kelly is long USG; Kelly is long MHK; Kelly is long XHB; Kelly is short EWA; Kelly is short EWY; Kelly is short Aussie dollar; Kelly is short Yen; Adami is long C; Adami is long GS; Adami is long INTC; Adami is long AGU; Adami is long NUE; Adami is long BTU; Stutland is long IBM and short calls; Stutland is long GE and short calls; Stutland is long KO and short calls; Stutland is long LQD; Stutland is long DIA puts; Stutland is long SFT and short calls; Stutland is short NLY put spread; Stutland is short TLT puts; Stutland is long TIPSStutland is long T and short calls; Stutland is long EFR floating rate treasury ETF; Market maker holding hedged positions in VIX futures and options

For Doug KassKass is long TBT common and calls

For Mary GilbertNo disclosure

For Jens NordvigNo disclosures

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